Traveling is already hectic enough. Remembering to ask for paper receipts and figuring out where you put all of them when you get home is really tedious. The good news is that the government has created a tool that simplifies the process a lot.
Per diems are essentially a standard rate the US government sets indicating how much it would likely cost someone to feed themselves while traveling for business. It was created for government workers, but thankfully the rest of us can use this tool on our own taxes.
When you travel overnight (i.e. not day trips), and it's for your freelance work, you can use the "meals and incidentals rate" to calculate your meals expenses for the city, state, or foreign location where you're traveling.
Side note: Unfortunately for freelancers, we generally can't take the "lodging" per diem, we have to keep our actual receipts for that.
How to Calculate Per Diems
Here's an example: Let's say in 2021 you live in Brooklyn and have to travel to LA to meet and work with a client for 4 days. Here's how you would calculate the cost of your meals for that trip:
- Got to www.perdiem101.com and look up the 2022 "meals & incidentals" rate for Los Angeles, California. (Spoiler: It's $66 for 2021.)
- Of those 4 days, you were traveling on the first day and the fourth day (For travel days, we only get to take 75% of the per diem rate.)
- So, that means $66.00 x 2 for the days you were in LA the full day, and $49.50 x 2 for the two days you were traveling. Your total for the trip is: $231
- Note: If you often have to pay for meals with clients, your actual costs may exceed the per diem. If you're mostly just covering your own costs though, then per diems are generally your friend.
You can also get per diem rates for US and International travel on the GSA website.
Remember: The rates change every year, so make sure to do fresh math each year, even if you go back to the same cities for travel regularly.
On Our Website
When you’re filling out your info on our website, do your best to calculate per diems for any trips you take. Add that amount to any local business meal expenses with clients or peers to get your total for the meals category for a given year.
Once you have your information uploaded to Brass Taxes, make an appointment and feel free to ask your preparer any additional questions about the totals you have for meals. You can also reach out to firstname.lastname@example.org with questions.